Versloot Dredging BV & Anor v HDI Gerling Industrie Versicherung AG & Ors (Rev 1), Court of Appeal - Commercial Court, June 14, 2013, [2013] EWHC 1666 (Comm)

Resolution Date:June 14, 2013
Issuing Organization:Commercial Court
Actores:Versloot Dredging BV & Anor v HDI Gerling Industrie Versicherung AG & Ors (Rev 1)

Neutral Citation Number: [2013] EWHC 1666 (Comm)Case No: 2011 - 1465IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONCOMMERCIAL COURTRoyal Courts of JusticeRolls Building, Fetter laneEC4A 1NLDate: 14/06/2013Before :THE HON. MR JUSTICE POPPLEWELL- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Chirag Karia QC and Tom Bird (instructed by Sach Solicitors) for the ClaimantsNigel Jacobs QC and Ben Gardner (instructed by Ince & Co) for the DefendantsHearing dates: 5-7, 11-14, 21, 27 March 2013- - - - - - - - - - - - - - - - - - - - -The Hon. Mr Justice Popplewell : Introduction1. This is a marine insurance claim for a partial loss. The Claimants (``the Owners'') are the owners of a gearless general cargo ship named ``DC MERWESTONE'' (``the Vessel''). The Defendants (``the Underwriters'') are the hull and machinery underwriters of the Vessel under a time policy for twelve months at 1 April 2009. On 28 January 2010 the Vessel was off the coast of Poland, shortly after commencing a laden voyage from Klaipeda, Lithuania, to Bilbao, Spain, when she suffered an ingress of water which flooded the engine room, and incapacitated the Vessel. The Vessel's main engine was damaged beyond repair. The claim by the Owners under the policy is for the resultant loss in the sum of €3,241,310.60. 2. The Underwriters advance three alternative defences to the claim. They deny that the loss was caused by an insured peril. They contend that the loss was caused by the unseaworthiness of the Vessel to which the assured was privy, with the result that no liability attaches by virtue of s. 39(5) Marine Insurance Act 1906. They contend that the claim is forfeit because the presentation of the claim was supported by fraudulent statements. In addition, they challenge one element of the quantum of the claim. The Vessel3. The Vessel is a Dutch registered gearless cargo vessel of 2,973 grt, 1,852 nrt and 5,010 dwt. She was built in 1974. In 2001 major renovation work was carried out in Romania and then in the Netherlands (under the supervision of Lloyds Register and the Dutch Shipping Inspectorate). A new bow and midship section were attached to the old aft part of the Vessel; the only original section which remained was aft of the engine room bulkhead at frame 24. She is 90.74m long, 15m in beam and has one hold divided into 3 by 2 non-watertight (moveable) bulkheads. Outboard of the cargo hold are five fuel and ballast wing tanks. There are five port and starboard double-bottom ballast tanks, which are divided longitudinally by a duct keel tunnel. 4. The duct keel, which played a critical part in the casualty, is 62.48m long, 1.8m wide and 1.2m high. It runs most of the length of the Vessel, from the bowthruster room in the foreship to the engine room at the aft of the Vessel. It has what ought to be watertight bulkhead separation from the bowthruster room at frame 112 forward, and from the engine room at frame 24 aft. It runs along the centre line beneath the hold, separating the five pairs of port and starboard double-bottom ballast tanks. Within the duct keel are remotely operated ballast valves, ballast pipes and electrical cables. The tunnel can be entered at three points. At the bowthruster room, which is situated beneath the chain locker at keel level in the bow, there is access through a vertical manhole located beneath the floor plates. The manhole is sealed by a cover which has screw bolts to maintain the watertight integrity of the bulkhead. A similar manhole is located at the aft end of the tunnel beneath the engine room floor plates. This engine room manhole was rarely used because of its inaccessibility. There is a further manhole access in the hold. 5. Once entered, the tunnel can be accessed along its full length, although it is an uncomfortably small space: those of a larger build would find it difficult to enter the tunnel and manoeuvre within it, and those of a smaller build who could enter it would have to travel along it by lying on their back and shifting in that position.The casualty6. On 21 January 2010 the Vessel arrived at Klaipeda, Lithuania, to discharge a cargo of soya meal and thereafter to load a cargo of scrap steel. She had her usual complement of six crew, comprising the Master (Captain Loosman), a Chief Officer, a Second Officer, an Engineer, and two ABs. Captain Loosen was the regular master of the Vessel, who had rejoined her at Rotterdam shortly before the commencement of the loaded voyage. The Chief Officer was 21 and newly promoted. The Engineer, Mr Catolin, held a fourth engineer's certificate. He was, however, very familiar with the Vessel, having served on her continuously from 2006 until the time of the casualty as the sole engineer, save for periods on leave. 7. The weather was exceptionally cold and the hatch covers and gangways were covered in ice. The outside temperature varied between minus 10°C and minus 35°C. The crew had to chip ice off the hatch covers before opening them, and used the Vessel's emergency fire pump and lines to blast the chipped ice away before opening the hatches. During this operation Captain Loosman slipped over and broke a number of ribs, as a result of which he was replaced for the subsequent voyage. 8. The emergency fire pump is housed in the bowthruster room. When the crew had finished using the emergency fire pump, they drained the deck lines, but did not drain the seawater from the emergency fire pump or close the sea inlet valve to the pump located in the bowthruster room, as it is common ground they ought to have done. 9. On 24 January 2010 the Vessel commenced loading her cargo of scrap steel and deballasting at the same time, having had to take on ballast for stability reasons when shifting berth prior to loading. Although the Vessel was able to pump out No.3 wing tanks, she was unable (pneumatically) to open the valves to Nos. 1 & 2 wing tanks and No.4 DB tank. All the valves were located in the duct keel. The Engineer entered the duct keel tunnel via the forward manhole in the bowthruster compartment to attempt to release frozen ballast valves. However the valves to No. 1 wing tanks were frozen and he was unable to open them. He assumed that the same would be true of the other valves. As a result a quantity of ballast water remained on board. Upon the Engineer leaving the tunnel, he and/or the Chief Officer replaced the manhole cover. There is an issue as to whether they did so properly and effectively. 10. The Vessel completed loading her cargo of a little over 4,000 mt of scrap steel on 27 January 2010. At about 0230 on 28 January 2010 Captain Lilipaly boarded the Vessel and took over as Master from Captain Loosman, who required medical assistance and returned home. Captain Lilipaly was familiar with the Vessel having served on her as Master on previous voyages. 11. The Vessel left port for Bilbao at about 0930 the same morning with the assistance of a local tug which acted as ice-breaker. Captain Lilipaly noticed that the Vessel was trimmed slightly by the head, which the crew told him was caused by the ballast. 12. At about 2058 that evening, 28 January 2010, the Engineer noticed water rising beneath the floor plates in the engine room. There is a dispute as to whether this was as a result of the engine room bilge alarm sounding. When the Engineer observed water in the engine room he went to the bridge where the Chief Officer was handing over the watch to the Master. The Master and the Engineer went down to the engine room. They saw water below the level of the engine room floor plates. It appeared to be pushing up. At about 2108 the Master ordered the Engineer to start pumping out the engine room bilges. The Master then returned to the bridge and sent out a distress alert at around 2138. Meanwhile, the rest of the crew were mobilised. 13. Despite attempts to empty the engine room bilges using the Vessel's two general service pumps, the water level continued to rise. The crew could not locate the source of ingress, which they believed to be in the engine room. An attempt was also made to use the Vessel's ballast pump to empty the engine room bilges by cutting a hole in the ballast suction line. This improvisation would have been capable of pumping the floodwater overboard but for a mop head which was drawn into the suction line so as to block it. 14. Several vessels responded to the distress call with rescue operations co-ordinated by the Maritime Rescue Co-Ordination Center at Gdynia. Various vessels offered and provided assistance, including the supply of portable pumps, but without success. The Master altered course towards the coast of Poland in case it became necessary to strand the vessel to prevent her from sinking, and continued to run the main engine for this purpose until about 0246 on 29 January 2010 when the main engine became fully submerged and stopped working. The engine room was sealed off and the crew retreated to the bridge, where they spent a cold and fearful night. 15. The tug ``AGIS'' came alongside at about 1000 on 29 January 2010 and the Vessel was towed to Gdynia. She was pumped out, and in due course it was determined that despite the initial common assumption, there was no leak in way of the engine room. On 22 February 2010 the Vessel was dry docked at Nauta Shipyards S.A. in Gydnia. Two days later the Vessel was refloated, and on 26 February 2010 she was towed to the Bredo Shipyard in Bremerhaven for permanent repairs to be carried out. The Vessel's main engine was damaged beyond repair and was replaced by a new engine and gearbox.The causes of the casualty 16. The cause and mechanism of ingress of water into the engine room during the casualty is not substantially in dispute. When the crew finished using the emergency fire hose prior to cargo operations at Klaipeda...

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